"We are pretty short of money. We have to fight for investments, to maintain the credit rating and show the international community that we are serious," Milanovic said in an interview in the central news broadcast on Nova TV, after he said at a government session earlier in the day that the country was in a recession.

Calling for thrift, the PM said that citizens would have to give up some things in the short-term for the sake of long-term goals.

"This will be a difficult year," he said, adding that despite negative indicators in almost all of Europe, he was still optimistic and believed that Croatia could do better.

Speaking of a 1.3% GDP decline in the first quarter of this year, he said that it was due to the recession in Europe as well as problems inherited from the previous government.

Asked if he shared the optimism of his ministers about a 0.8% growth rate this year, he said that he believed the growth would be above zero.

"If we don't succeed, we'll try to achieve it next year. We have fought for this mandate in order to overcome the crisis. Overcoming a recession usually takes twice the time you spend in it."

He underlined the need to launch an investment cycle, calling on citizens to be patient and realistic and expressing confidence that they would overcome the current crisis if they saw that their government was honest and competent.

Asked about forthcoming negotiations with trade unions on the restriction of some of the acquired rights in the public sector, Milanovic said that the approximately 150,000 employees in the state administration and public services had to share the destiny of other citizens.

"We will not change the base salary, but some benefits will have to be given up because there is no money."